Annual headline inflation in South Africa dropped by almost 1% in July, bringing it to its lowest level in two years.
Inflation on breads, cereals, and meats also dropped, but transport was the biggest contributor to last month’s decrease, with an almost 17 percent decline.
The new figures, published by Stats SA on Wednesday, reveal that inflation fell to 4.7 percent in July, down by 0.7 percent from June’s rate of 5.4 percent.
This means annual inflation has declined by 1.6 percent in two months, following June’s 0.9 percent drop from the month prior.
Consumer prices, however, have increased on average by 0.9 percent between June 2023 and July 2023. This is up from the monthly rise of 0.2 percent recorded in both May and June, Stats SA reports.
Transport puts the brakes on overall inflation
Previously a major upward driver of inflation, the transport category helped pull overall inflation down in July.
In 2021 and 2022, overall inflation was mainly pushed higher by transport, with headline consumer inflation hitting a 13-year high of 7.8 percent in July 2022, thanks to a 44 percent contribution from transport.
Fuel prices were largely to blame. In July 2021, the price of inland 95-octane petrol was R17,39 per litre, increasing sharply to a record high of R26,74 per litre in July 2022. Such was the impact of fuel that South Africa’s inflation rate would have been 5.5 percent instead of 7.8 percent in July 2022 if fuel prices were stable.
After peaking in July 2022, fuel prices began to ease. Inland 95-octane petrol receded to R22,46 per litre in July 2023 – for a vehicle with a 50-litre fuel capacity, this translates to a saving of R214.
The decline in fuel prices weakened the upward push of transport on consumer inflation, with the annual rate for fuel decreasing by 16.8 percent in July 2023. This dragged the transport category down into negative territory for the first time since January 2021.
Bread, cereals, and meat inflation falls further
Food inflation has also eased, but not as quickly as transport, Stats SA says. The annual rate for the food and non-alcoholic beverages (NAB) category was 9.9 percent in July, lower than June’s 11 percent.
Annual inflation for bread and cereals slowed to 13.1 percent, from 15.5 percent in June. Maize meal, an important staple, was cheaper in July than it was in June, with prices falling on average by 0.7 percent.
Annual meat inflation declined for a fifth consecutive month, easing to 5.1 percent.
Dairy, beverages, and sugar, sweets, and desserts buck the downward trend
The annual rate for milk, eggs, and cheese increased to 14.4 percent from 14.1 percent in June. Cheese prices are rising sharply, with large annual increases recorded for cheese spread – up 19.5 percent, cheddar cheese – up 19 percent, and Gouda cheese – up 16.6 percent.
Annual inflation for hot beverages rose to 9 percent in July from 8.7 percent in June, with the rate for instant coffee increasing from 10.3 percent to 11.5 percent.
Sugar prices were up too, with white and brown sugar, on average, up 20.8 percent and 22.8 percent respectively. The sugar, sweets, and desserts category recorded an annual inflation rate of 18.7 percent, up from 16.4 percent in June. This is the highest reading for this category since May 2017.
Inflation for alcoholic beverages is also picking up, the data shows. The annual rate for the category increased to 7.8 percent in July from 6.9 percent in June. Annual wine inflation edged higher to 9.8 percent and beer saw its rate climb to 7.4 percent.
The largest price increases for the month